Looks like someone else has been investigating the whole buyer's agent compensation issue. The Wall Street Journal published an article this week by writers, James R. Hagerty and Ruth Simon, entitled "Do Real-Estate Agents Have a Secret Agenda?"
It was like deja vu all over again. If you've been reading this blog for a while, you may remember my post on Feb. 26 of this year entitled "Conflict of Interest". In it I raised the same concerns that these writers addressed in their piece, sellers trying to subvert the process by offering sweet temptations. Rather than rehash the whole issue, click the title to read my earlier piece. I'm not saying all bonuses are undeserved, but, I do think that buyers should be made aware of extra compensation intended to attract the buyer's agents. If your agent goes above and beyond the call of duty, she may deserve every penny being offered. If it was an easy deal for her, she may be happy to rebate that bonus to you. Knowledge is power.
Saturday, November 11, 2006
Saturday, November 04, 2006
The Big Chill
It's a chilly market out there, people. Motivated sellers have been progressively chopping prices as they probe for the magic number that will generate an offer but buyers, for the most part, have frozen in their tracks. We have reached a take it or leave it point for many sellers. Contrary to popular opinion, most sellers are not in trouble and many are quite willing to ride out the downturn. If you didn't catch my story on the "alternative universe" earlier this year take a moment to read it. It's about the underlying market chugging along while the speculator market grabs the headlines and gets the reality shows. As the chief economist of the National Association of Realtors, David Lereah, is fond of saying, there is no national housing market. Heck, there's not even a Cocoa Beach and Cape Canaveral housing market. For the record, I'm not impressed with Mr. Lereah's self-serving rhetoric but he is right on at least one point, that there are markets within markets that operate on their own and separate dynamics.
While there may be scores of pre-construction condo sellers who are in very real trouble, the same can't be said for the average seller of existing condos and single-family homes. There is a trickle-down pressure on all properties when one segment becomes sick, BUT, there are many sellers that can continue to enjoy their beach homes while waiting out the market. The ones who must sell are starting to price their properties aggressively and deals are being made. The bottom appears to have been passed at Portside as the last of the super deals have been scooped up and all offerings there at the moment are priced considerably above the recently contracted units. There are currently no 2 or 3 bedroom units offered under $200,000. Like the guest gurus on CNBC are fond of saying, "It's a stock picker's market." There will always be individual issues within a market that move in a direction opposite that of the market. Do your homework or talk to someone like me who does it for you.
MLS stats for October 2006 - Cocoa Beach & Cape Canaveral
CLOSED IN OCTOBER
single family homes____8
condos & townhomes___20
ACTIVE FOR SALE
single family homes____140
condos & townhomes___995
Cocoa Beach and Cape Canaveral are almost equally divided on condos sold or listed but Cocoa Beach has the majority of single-family home activity. Of the 20 closed condos, only 1 was for more than $500,000, and 12 were under $300,000.
In a bizarre move this week, the National Association of Realtors launched a 40 million dollar advertising campaign themed "Now is a Great Time to Buy or Sell a Home". Think about that for just a second. The body of the ad targets buyers only but, apparently, NAR didn't want to alienate sellers in the process, so, the "or sell" was added to the header as an afterthought. Beware statements from organizations and people that stand to benefit from your acceptance of their declarations. As I'm fond of saying, do your homework. Now might be a good time to buy or sell but it's not because someone spent $40,000,000 saying it. Personally, I think it's a better time to buy than sell and only for specific properties that are priced below recent sales.
Deal of the week; a 2 year-old, 3/2 townhome at Canaveral Woods with garage for $243,000. It's still active as of this writing.
While there may be scores of pre-construction condo sellers who are in very real trouble, the same can't be said for the average seller of existing condos and single-family homes. There is a trickle-down pressure on all properties when one segment becomes sick, BUT, there are many sellers that can continue to enjoy their beach homes while waiting out the market. The ones who must sell are starting to price their properties aggressively and deals are being made. The bottom appears to have been passed at Portside as the last of the super deals have been scooped up and all offerings there at the moment are priced considerably above the recently contracted units. There are currently no 2 or 3 bedroom units offered under $200,000. Like the guest gurus on CNBC are fond of saying, "It's a stock picker's market." There will always be individual issues within a market that move in a direction opposite that of the market. Do your homework or talk to someone like me who does it for you.
MLS stats for October 2006 - Cocoa Beach & Cape Canaveral
CLOSED IN OCTOBER
single family homes____8
condos & townhomes___20
ACTIVE FOR SALE
single family homes____140
condos & townhomes___995
Cocoa Beach and Cape Canaveral are almost equally divided on condos sold or listed but Cocoa Beach has the majority of single-family home activity. Of the 20 closed condos, only 1 was for more than $500,000, and 12 were under $300,000.
In a bizarre move this week, the National Association of Realtors launched a 40 million dollar advertising campaign themed "Now is a Great Time to Buy or Sell a Home". Think about that for just a second. The body of the ad targets buyers only but, apparently, NAR didn't want to alienate sellers in the process, so, the "or sell" was added to the header as an afterthought. Beware statements from organizations and people that stand to benefit from your acceptance of their declarations. As I'm fond of saying, do your homework. Now might be a good time to buy or sell but it's not because someone spent $40,000,000 saying it. Personally, I think it's a better time to buy than sell and only for specific properties that are priced below recent sales.
Deal of the week; a 2 year-old, 3/2 townhome at Canaveral Woods with garage for $243,000. It's still active as of this writing.
Sunday, October 22, 2006
Back to Basics
In our condo market, most activity has been bunched at the low end of the price scale. For the first 22 days of October, out of 10 closed condo sales on our MLS, only one was for more than $330,000. It closed at $490,000. There continue to be closings of brand-new high-end condos but they are not showing up in our MLS stats because only those that were flipped show in those numbers and flips have gone the way of the pterodactyl.
For the last 30 days, we have had 22 MLS-listed condos and townhomes close. Current total "for sale" inventory is 1014 units. My paper napkin math tells me that, at this rate, we have a 46 month supply. Digging a little deeper into the numbers we see 203 of those listed units over $500,000. There were 2 closings in that price range in the last 30 days, so, our activity is obviously lopsided. This snapshot absorption rate is somewhat misleading as September through December are historically our slowest sales months although it is not good news for sellers hoping to cash out before the end of the year. Until the bulk of our winter guests begin arriving in early 2007 expect to have major negotiating power as a buyer.
The cheapest oceanfront condo I can find today in our MLS is a 1 bedroom unit at the Saturn in Cocoa Beach with a side ocean view for $169,900. There are several dozen direct ocean units in the $300-$350,000 range including one 2nd-floor, 3 bedroom direct ocean unit in south Cocoa Beach for $349,000. I find 14 units listed for over $1 million with the peak represented by a 4617 sq.ft. unit in Cape Canaveral for $2,750,000.
I'm seeing more and more buyer's agent bonuses and higher commissions being offered out by sellers. Their intent is to somehow entice agents to favor their properties over others. Makes more sense to me to just lower the price, but, maybe a seller's pride can be left more intact by getting closer to their mental target price and paying higher costs. As a buyer, why not ask your agent for that bonus at the same time you're asking the seller for concessions. You are the one bringing the money after all, so, in effect, you have paid that bonus buried in the selling price even though your agent may not have disclosed to you up front that she was receiving a bonus. Our MLS, for some reason, hides the bonus amount on the customer printouts. Read my previous post on this subject here.
If you can, try making it to the beach soon. The water is still warm, the mullet run is still happening and the beaches are deserted most days this time of year.
Here's a snook from the surf on October 25.
For the last 30 days, we have had 22 MLS-listed condos and townhomes close. Current total "for sale" inventory is 1014 units. My paper napkin math tells me that, at this rate, we have a 46 month supply. Digging a little deeper into the numbers we see 203 of those listed units over $500,000. There were 2 closings in that price range in the last 30 days, so, our activity is obviously lopsided. This snapshot absorption rate is somewhat misleading as September through December are historically our slowest sales months although it is not good news for sellers hoping to cash out before the end of the year. Until the bulk of our winter guests begin arriving in early 2007 expect to have major negotiating power as a buyer.
The cheapest oceanfront condo I can find today in our MLS is a 1 bedroom unit at the Saturn in Cocoa Beach with a side ocean view for $169,900. There are several dozen direct ocean units in the $300-$350,000 range including one 2nd-floor, 3 bedroom direct ocean unit in south Cocoa Beach for $349,000. I find 14 units listed for over $1 million with the peak represented by a 4617 sq.ft. unit in Cape Canaveral for $2,750,000.
I'm seeing more and more buyer's agent bonuses and higher commissions being offered out by sellers. Their intent is to somehow entice agents to favor their properties over others. Makes more sense to me to just lower the price, but, maybe a seller's pride can be left more intact by getting closer to their mental target price and paying higher costs. As a buyer, why not ask your agent for that bonus at the same time you're asking the seller for concessions. You are the one bringing the money after all, so, in effect, you have paid that bonus buried in the selling price even though your agent may not have disclosed to you up front that she was receiving a bonus. Our MLS, for some reason, hides the bonus amount on the customer printouts. Read my previous post on this subject here.
If you can, try making it to the beach soon. The water is still warm, the mullet run is still happening and the beaches are deserted most days this time of year.
Here's a snook from the surf on October 25.
Thursday, October 05, 2006
Deal, no deal?
Depends on the deal. Brand-new, over $500,000 condo? The answer is, no deal. Existing, priced-right condo below $500,000? It appears that, for now, the answer is likely to be, we have a deal. As I mentioned in my last post, sales activity has picked up. Our office continues to be busy with sales of existing condos and single-family homes. New construction appears to be pretty much dead in the water, although a few units at drastically-reduced prices have moved recently. How about a brand new, 2500 sq.ft. never-lived-in, 4 bedroom 2.5 bath townhouse with 2 car garage in Cape Canaveral for $382,000? Sold in September. The direct ocean 3 bedroom, 1753 sq.ft. unit in south Cocoa Beach that I mentioned in an earlier post for $399,900 sold for $375,000. Portside prices have started creeping back up as almost all the units have closed. The cheapest recorded resales in September were $185,000 for a 2 bedroom and $214,000 for a 3 bedroom.
There have been some remarkable price reductions since October 1. Most notable has been the reduction of four unsold units at the not-yet-started Cocoa Cabanas condo. Two units have been dropped from $985,000 to $750,000 and 2 others from $985,000 to $775,000. A beautiful 2000 sq.ft. direct ocean corner unit at Wavecrest next door has been reduced from an original price of $630,000 to $489,000 this morning. One motivated investor across the street at Magnolia Bay is offering a new boat to buyers. He probably needs an edge with a total of 25 other investor-owned units in the complex offered on the MLS. These sellers can glimpse the likely future by looking down the street to the recently-completed Crescent Palms where 11 units are still active on the MLS out of a total of 15. A little pain is being felt there.
Magnolia Bay
I was reminded of a nasty little secret about pre-construction purchases yesterday by a local TV news story. Seems that some pre-construction buyers of homes in a new Orlando neighborhood are having trouble getting mortgages because the appraisals for their new homes are coming in below the purchase price. Usually in a Florida real estate deal with a FAR or FAR/BAR contract, a buyer getting a mortgage would make her purchase contingent on acquiring a mortgage. Should the property fail to appraise making the mortgage unobtainable, the buyer can cancel the contract and have her deposit returned. Alternatively, the seller can reduce the purchase price to the appraised value and the deal can proceed. Unfortunately for the Orlando buyers, they used a developer's contract, which is common in pre-construction, and they have no financing contingency. If they cannot close, the developer can keep their deposits. This was never an issue in the rapidly appreciating years of the recent past but it is now. What happens when that new condo that Investor X reserved for $600,000 appraises for $525,000? Does he walk from his $60,000 deposit or does he go ahead and close and take the $75,000 immediate paper loss? Not exactly a win/win offering. It's not even a good deal for the developer who pockets the deposit. He doesn't want to be left with a handful of forfeited deposits and unsold, under-appraised units.
Among the scores of offered properties, some good deals exist. Those of you looking to buy but afraid of further price erosion should approach your search with the intention of finding those properties that are already priced in anticipation of more depreciation. These properties exist. They're just buried among the hundreds of optimistically-priced units that are competing for attention.
Here are our current stats. Most of the closed sales of condos in September were older, existing units. The newer units listed on the MLS are, for the most part, assignment of contract sales by investors and very few of those are moving.
MLS stats from Cocoa Beach and Cape Canaveral
Active condos for sale, all prices________1029
___condos over $500,000_____________214
Single family homes, all prices__________145
Closed condos in Sept 2006_____________36
Closed single-family Sept________________8
Snook are being caught at the Port, the Inlet and the beaches when the surf is calm enough. I had a wonderful fillet last weekend that a friend was kind enough to share. If you get a chance, get out there and try for one of these tasty fish when the ocean permits.
There have been some remarkable price reductions since October 1. Most notable has been the reduction of four unsold units at the not-yet-started Cocoa Cabanas condo. Two units have been dropped from $985,000 to $750,000 and 2 others from $985,000 to $775,000. A beautiful 2000 sq.ft. direct ocean corner unit at Wavecrest next door has been reduced from an original price of $630,000 to $489,000 this morning. One motivated investor across the street at Magnolia Bay is offering a new boat to buyers. He probably needs an edge with a total of 25 other investor-owned units in the complex offered on the MLS. These sellers can glimpse the likely future by looking down the street to the recently-completed Crescent Palms where 11 units are still active on the MLS out of a total of 15. A little pain is being felt there.
Magnolia Bay
I was reminded of a nasty little secret about pre-construction purchases yesterday by a local TV news story. Seems that some pre-construction buyers of homes in a new Orlando neighborhood are having trouble getting mortgages because the appraisals for their new homes are coming in below the purchase price. Usually in a Florida real estate deal with a FAR or FAR/BAR contract, a buyer getting a mortgage would make her purchase contingent on acquiring a mortgage. Should the property fail to appraise making the mortgage unobtainable, the buyer can cancel the contract and have her deposit returned. Alternatively, the seller can reduce the purchase price to the appraised value and the deal can proceed. Unfortunately for the Orlando buyers, they used a developer's contract, which is common in pre-construction, and they have no financing contingency. If they cannot close, the developer can keep their deposits. This was never an issue in the rapidly appreciating years of the recent past but it is now. What happens when that new condo that Investor X reserved for $600,000 appraises for $525,000? Does he walk from his $60,000 deposit or does he go ahead and close and take the $75,000 immediate paper loss? Not exactly a win/win offering. It's not even a good deal for the developer who pockets the deposit. He doesn't want to be left with a handful of forfeited deposits and unsold, under-appraised units.
Among the scores of offered properties, some good deals exist. Those of you looking to buy but afraid of further price erosion should approach your search with the intention of finding those properties that are already priced in anticipation of more depreciation. These properties exist. They're just buried among the hundreds of optimistically-priced units that are competing for attention.
Here are our current stats. Most of the closed sales of condos in September were older, existing units. The newer units listed on the MLS are, for the most part, assignment of contract sales by investors and very few of those are moving.
MLS stats from Cocoa Beach and Cape Canaveral
Active condos for sale, all prices________1029
___condos over $500,000_____________214
Single family homes, all prices__________145
Closed condos in Sept 2006_____________36
Closed single-family Sept________________8
Snook are being caught at the Port, the Inlet and the beaches when the surf is calm enough. I had a wonderful fillet last weekend that a friend was kind enough to share. If you get a chance, get out there and try for one of these tasty fish when the ocean permits.
Wednesday, September 20, 2006
A rose by any other name...
What a September it's been so far. We've had the best surf in recent memory and the hurricane cycle has returned to the big eastern loop producing clean swells with no local winds. Market activity has picked up considerably, at least from my personal observations. My office has had it's busiest 2 months of the year and conversations with other agents on the beach confirm the same trend. We still have high inventory levels but some prices have dropped to the magic point where buyers are comfortable participating. Existing homes and condos are moving when priced at 2003-2004 levels and there are sellers who realize this.
The next leg of this transition is starting to play out. Michelina on the beach has begun closings and Magnolia Bay on the river will soon begin closings. There is still a lot of pain yet to come in these and other high-end new condos. I am seeing lots of speculators trying to dump their investment pre-construction units with very little success. The difference in the price of a new unit and an existing unit is great enough that a willing buyer can purchase an existing unit in a good building and completely renovate and save six figures.
Here are the sales numbers from the MLS for the 1st through the 15th of September. The actual number may be higher as some sales may not have been posted yet by a tardy listing agent.
Closed condos___________20
Closed single-family________4
MLS stats, Cocoa Beach and Cape Canaveral - Sept. 24, 2006
Active condos for sale, all prices________1019
___condos over $500,000_____________216
Single family homes, all prices__________135
I'll leave you with a shot of last Wednesday's surf. My neighbor Gerry dropping in on a nice little right as the guys in the boat behind chase tarpon. September, truly a rose of a month in Cocoa Beach.
The next leg of this transition is starting to play out. Michelina on the beach has begun closings and Magnolia Bay on the river will soon begin closings. There is still a lot of pain yet to come in these and other high-end new condos. I am seeing lots of speculators trying to dump their investment pre-construction units with very little success. The difference in the price of a new unit and an existing unit is great enough that a willing buyer can purchase an existing unit in a good building and completely renovate and save six figures.
Here are the sales numbers from the MLS for the 1st through the 15th of September. The actual number may be higher as some sales may not have been posted yet by a tardy listing agent.
Closed condos___________20
Closed single-family________4
MLS stats, Cocoa Beach and Cape Canaveral - Sept. 24, 2006
Active condos for sale, all prices________1019
___condos over $500,000_____________216
Single family homes, all prices__________135
I'll leave you with a shot of last Wednesday's surf. My neighbor Gerry dropping in on a nice little right as the guys in the boat behind chase tarpon. September, truly a rose of a month in Cocoa Beach.
Thursday, September 07, 2006
August numbers
The numbers are in for August and, as expected, sales were very slow. Condo inventory has reduced somewhat but, at the current sales rate, it will take more than 3 years to absorb. I have seen some significant price reductions, most notably this week, a canalfront home in Cocoa Beach lowered to $399,000. Buyers with the nerve to step up and play are walking away with prices not seen in several years.
MLS stats from Cocoa Beach and Cape Canaveral
Active condos for sale, all prices________991
___condos over $500,000______________210
Single family homes, all prices__________140
Closed condos in August 2006___________28
Closed single-family Aug________________10
Labor Day was a great, longboard day of surf in Cocoa Beach. Small, glassy and peeling for blocks. The mullet run has started and I've pulled 2 snook out of the surf in the last week. Hopefully, the tarpon will move within casting range any day now. Get out there and enjoy fall in Florida. The kids are back in school, the tourists have gone home and the weather is beautiful.
MLS stats from Cocoa Beach and Cape Canaveral
Active condos for sale, all prices________991
___condos over $500,000______________210
Single family homes, all prices__________140
Closed condos in August 2006___________28
Closed single-family Aug________________10
Labor Day was a great, longboard day of surf in Cocoa Beach. Small, glassy and peeling for blocks. The mullet run has started and I've pulled 2 snook out of the surf in the last week. Hopefully, the tarpon will move within casting range any day now. Get out there and enjoy fall in Florida. The kids are back in school, the tourists have gone home and the weather is beautiful.
Friday, August 25, 2006
Beware the median
I caught an interview on CNBC's Squawk Box this morning with Tom Gallagher, Florida's Chief Financial Officer. The interview was supposed to be about the remaining cleanup from Hurricane Katrina's fly-by one year ago but Becky Quick moved on to the state of Florida's housing market. The otherwise candid Mr. Gallagher mentioned that building had slowed but that prices were still increasing, although at only 1% annually. Folks, that is what's known as spin. Although accurate in one sense, it does not represent the whole truth. What Mr. Gallagher was referring to was the median price, which in the most recently reported period had increased by 1%. The median is that magical halfway point in the graph where half of all sales are above and half below. This number is in no way related to the appreciation rate of individual properties.
As the media is reporting more and more on the housing slowdown, I'm seeing all kinds of commentary about the direction and extent of the event. The camps seem to be divided between the end-of-the-world predictions of the housing bubble bloggers and the outright denial of the National Association of Realtors. The former is fond of the term "crash" and the latter, the phrase "soft landing". As with most polarizing issues, the truth probably lies somewhere in the middle. Sellers who are unwilling to accept the reality of lower prices may not sell their properties and buyers who are waiting for the bottom may still be waiting after the bottom has passed. No one is going to wave a red flag and say, "This is it. The bottom is now."
I have already seen deals go down that are going to be hard to beat even if the downtrend continues for a while. Some sellers have completely capitulated and are dumping properties at bargain prices. My advice to sellers is to be bold and price aggressively if you must sell. You have lots of competition. My advice to buyers is get ready. The time to start looking is now. Be ready to pounce on that perfect property at a discount when it hits. If you're looking for a like-brand new 3/2, 1500 sq.ft. condo in a riverfront complex for $220,000, you've already missed a good one. How about a 1350 sq.ft., 2/2, 6th floor, direct ocean condo for $299,900? Sold last month. Photo below of this building.
Brand new 1/1.5, 908 sq.ft. condo with cathedral ceilings, short walk to the beach for $137,000. Again, sold last month. One more recent sale; a 1279 sq.ft. 2/2.5 townhouse with boat slip, 3 blocks from the beach for $205,000. There are others out there and more to come as the sellers come to terms with their competition and the reality of the market.
Freddie Mac reports that 30 year mortgage rates are at their lowest point since April 6 of this year. National average for a 30 year fixed is 6.48%, down for the 5th week in a row. Until next time, make sure your cast nets are in order and your snook fishing gear is ready. The mullet run is imminent and the big tarpon are already active off the beach. I can't wait.
As the media is reporting more and more on the housing slowdown, I'm seeing all kinds of commentary about the direction and extent of the event. The camps seem to be divided between the end-of-the-world predictions of the housing bubble bloggers and the outright denial of the National Association of Realtors. The former is fond of the term "crash" and the latter, the phrase "soft landing". As with most polarizing issues, the truth probably lies somewhere in the middle. Sellers who are unwilling to accept the reality of lower prices may not sell their properties and buyers who are waiting for the bottom may still be waiting after the bottom has passed. No one is going to wave a red flag and say, "This is it. The bottom is now."
I have already seen deals go down that are going to be hard to beat even if the downtrend continues for a while. Some sellers have completely capitulated and are dumping properties at bargain prices. My advice to sellers is to be bold and price aggressively if you must sell. You have lots of competition. My advice to buyers is get ready. The time to start looking is now. Be ready to pounce on that perfect property at a discount when it hits. If you're looking for a like-brand new 3/2, 1500 sq.ft. condo in a riverfront complex for $220,000, you've already missed a good one. How about a 1350 sq.ft., 2/2, 6th floor, direct ocean condo for $299,900? Sold last month. Photo below of this building.
Brand new 1/1.5, 908 sq.ft. condo with cathedral ceilings, short walk to the beach for $137,000. Again, sold last month. One more recent sale; a 1279 sq.ft. 2/2.5 townhouse with boat slip, 3 blocks from the beach for $205,000. There are others out there and more to come as the sellers come to terms with their competition and the reality of the market.
Freddie Mac reports that 30 year mortgage rates are at their lowest point since April 6 of this year. National average for a 30 year fixed is 6.48%, down for the 5th week in a row. Until next time, make sure your cast nets are in order and your snook fishing gear is ready. The mullet run is imminent and the big tarpon are already active off the beach. I can't wait.
Tuesday, August 08, 2006
Dog Days of Summer
A brief update from early August. Activity continues to be brisk at our office, although, the overall market is very slow. Inventory in Cocoa Beach and Cape Canaveral is holding steady in the 1100 to 1200 range and sales have slowed to just 33 total closed units (condos and single-family) in July. All units in Portside Villas should be closed in a few more weeks.
MLS stats from Cocoa Beach and Cape Canaveral
Active condos for sale, all prices_________1002
___condos over $500,000______________218
Single family homes, all prices___________144
Closed condos in July 2006______________28
Closed single-family July_________________5
The fall mullet run should be starting shortly with vast schools of mullet swimming south along our ocean shore coinciding with the reopening of snook season on September 1st. If you enjoy fishing, this is a great time to get to the beach and enjoy some fun fishing as the snook, mackeral, tarpon and other large fish move in close for an easy meal.
MLS stats from Cocoa Beach and Cape Canaveral
Active condos for sale, all prices_________1002
___condos over $500,000______________218
Single family homes, all prices___________144
Closed condos in July 2006______________28
Closed single-family July_________________5
The fall mullet run should be starting shortly with vast schools of mullet swimming south along our ocean shore coinciding with the reopening of snook season on September 1st. If you enjoy fishing, this is a great time to get to the beach and enjoy some fun fishing as the snook, mackeral, tarpon and other large fish move in close for an easy meal.
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